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  • Writer's pictureStephen Boatman

Strategies from “Tax Free Wealth” By Tom Wheelwright, CPA

Updated: Jan 22

I recently read “Tax-Free Wealth” and thought I would write out a few favorite tax strategies that came up while reading. One important point is that most of these strategies are only possible for small business owners, and that’s because the tax code is much more generous towards small business owners to incentivize job creation. And if a book were written on personal tax strategies, it would be about half as long.

This is by no means an exhaustive list, and I can personally vouch for the fact that there are a lot of tax strategies I see on a regular basis that weren’t brought up in this book. But, it takes a good swing at discussing business tax planning that isn’t as prevalent in the tax conversation.

14 Tax Strategies From The Book

Tax Free Wealth

  1. Don’t start a business just for the tax deduction. Paying taxes is cheaper than failing at business.

  2. Be very cautious when buying things just for a deduction. You can go poor quickly with this strategy if the things you buy depreciate or are illiquid.

  3. Possibly put family to work and pay for their expenses (car, school, trip, sports, etc.) from their income. Or you could use this money to invest in their 529 or Minor Roth IRA account.

  4. Only you can reduce your taxes. Advisors can point you in the right direction, but you must walk.

  5. Tax planning is a weekly effort. Not a year-end effort.

  6. Possibly pay yourself a low but reasonable salary and pay yourself the rest in dividends to diminish social security and Medicare taxes.

  7. Certain items are exempt from sales taxes. Manufacturing equipment, raw materials, Inventory meant for re-sale, and equipment meant for research and development.

  8. Ensure your property taxes are appropriate regarding the value of your real estate. Only $10k is deductible, so argue the value if you think it’s inflated. Some specific companies that can help with this are state and sometimes county-specific.

  9. If you are trying to avoid estate taxes, gifting limited partnership shares that realize a minority or partial ownership discount could be advantageous. This is due to the discounted value of shares due to their illiquidity.

  10. Consider cost segregation as a part of your real estate tax strategy. Even if you have owned the property for multiple years, you could realize those previous year's deductions in one year.

  11. Consider 1031 exchanges when selling real estate.

  12. You could move income through kids or service corporations in order to lower your tax rate.

  13. Charitable Remainder Trust: “Charitable remainder trusts are irrevocable trusts that let you donate assets to charity and draw annual income (4%-6% of trust value) for life or for a specific time period.” This could be useful in extremely high-income years if you are already charitably inclined.

  14. Travel/vacation can be deductible if more than 50% of your time spent while traveling is used for business.

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